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A Punch in the Gut for Internet Radio?

Dave Newmark and Rockie Thomas
A Punch in the Gut for Internet Radio? Dave Newmark and Rockie Thomas

After the Copyright Royalty Board ruled to increase performance royalty rates for internet radio stations, we can't help but hum the Chumbawamba tune, "I get knocked down/But I get up again/You're never gonna keep me down."

We feel knocked down, yes, but as the song implies, this isn't the first blow we've gotten up from in the past, and we're getting up now again.

The issue in a nutshell is that the ruling changes the performance royalty fee structure from a flat-rate, revenue-based model to one based on a per-song/per-listener fee. The ruling goes into effect retroactively (covering 2006), and the proposed fee more than doubles by 2010.

Many internet broadcasters cannot afford this increase, and especially the retroactive fees.

Why should advertisers care? Because internet radio combines desirable demographics with precision targeting abilities like no other medium. Here's how:

  • Online stations reach an affluent, tech-savvy audience of loyal listeners who tune in for long periods of time.

  • Internet radio engages consumers with audio, visual and interactive elements while they're on their computers, making it easier for them to respond to calls to action by clicking directly to a website.  

  • So far it's an uncluttered medium, with fewer ads overall and less competition for listener attention.  

  • Broadcast streams are trackable through the servers, providing the precise number of impressions delivered, which is a valuable bonus as more marketers measure their costs against the bottom line.  

A few disclosures: One of us (Rockie) is an independent internet broadcaster who recently teamed up with the other (Dave), who's been in radio advertising for more than 27 years. Together, with software provider Spacial Audio, we've introduced a marketplace that helps internet broadcasters sell advertising. We did this because we love radio in all its forms, and we support everything the industry needs to survive, no, make that thrive.

All new industries suffer a few beatings at some point. The proposed rates are sure to be a financial drain on the stations, but they're just as sure to be challenged. Indeed, many people already are working behind the scenes to take the necessary legal steps to correct what's perceived to be an errant decision. Meanwhile, sites like Save Our Internet Radio are helping concerned internet radio listeners voice their opinions on the issue to their representatives in Washington, D.C. 

Spacial Audio's CEO Bryan Payne sees this as just another challenge in a long list of many he's encountered. His company created the infrastructure that has helped a decentralized marketplace of online broadcasters grow, providing the technology needed to run their stations, track playlists, royalties and insert ads.

"We've been working for years to make this a robust medium," he said. "The audience is growing, and advertisers are coming on board." 

For marketers, perhaps the current situation presents an opportunity. More than 72 million people already tune in to internet radio every month (according to the latest Bridge Ratings report). And now even more people will be introduced to the industry, thanks to the publicity this controversy is attracting. Now may be the very best time to consider the medium. 

Are we facing the demise of internet radio? Hardly. It's just another punch in the gut to a growing industry that's finally getting the attention it deserves. It's a hard punch, granted. But it's one we can take.

Dave Newmark is a radio advertising pioneer  and founder and CEO of Bid4Spots. .

Rockie Thomas is a nationally known internet radio expert and head of Bid4Spots’ internet radio division.


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